Reassessing the likelihood of achieving the FY2027 full-year forecast following the upward revision to the first-half forecast

FY2027-Q1 consolidated revenue was ¥7,716 million, up 1.2% year on year, while operating profit was ¥312 million, down 7.7%. Progress against the full-year forecast stood at only 22.4% for revenue and 17.8% for operating profit, indicating that profit is ramping up more slowly than revenue. Ordinary profit was ¥402 million, up 4.3%, but quarterly net profit attributable to owners of the parent was ¥226 million, down 4.8%, so the direction of each profit measure was not consistent.

According to reports following the 2 November disclosure, the FY2027-H1 forecasts were raised to revenue of ¥17,070 million, operating profit of ¥940 million, ordinary profit of ¥1,000 million and net profit of ¥620 million. The reported reasons for the revision included stronger demand in India, a recovery in the Chinese market and the assumption of a weaker yen. This indicates that first-half profit is expected to be stronger than initially assumed, but these remain forecasts, and the difference from actual results will need to be checked at the next earnings announcement.

Compared with the full-year forecasts, the revised first-half forecasts represent 49.5% of full-year revenue, 53.7% of operating profit, 58.8% of ordinary profit and 62.0% of net profit. Since the plan calls for more than half of annual profit to be generated in the first half, if first-half results fall short of the revised forecasts, the company would need to generate ¥810 million of operating profit, ¥700 million of ordinary profit and ¥380 million of net profit in the second half. It is particularly important to determine whether the first-half upward revision reflects temporary foreign-exchange and regional factors or assumes that the recovery in demand will continue into the second half.

At the next earnings announcement, the focus should be not only on whether the full-year forecasts were maintained, but also on the gap between first-half results and the revised forecasts, regional revenue and operating profit, the contribution of demand in China and India, and the effects of the weaker yen and import costs. Even if first-half operating profit exceeds ¥940 million, the likelihood of achieving the full-year forecast will not improve as much as the revenue outlook if profit margins in Asia have not recovered.